WhitMar has over 30 years history in generating and drilling oil and gas prospects in the US.  Over the past ten years, we have put together several large leasehold blocks in various active oil and gas shale plays in the US, in which we have brought in joint venture partners (i.e. (i) XTO/Exxon – 70,000 leasehold acres in the Marcellus Shale, (ii) EnCana – 30,000 acres in the Marcellus Shale, (iii) Anschutz Exploration – 25,000 acres in the Trenton-Black River/Marcellus Shale , (iv) Carrizo/SWN Energy– 40,000 acres in the  Marcellus Shale,  (v) QEP Energy – 8,500 acres in the Haynesville Shale and (vi) Samson Resources/Whiting/Oasis – 55,000 acres in the Bakken Shale.

 

Recently, WhitMar has become bullish on natural gas (see attached article), and, to that end, we have been leasing lands in the Arkoma Basin of Oklahoma that are prospective for natural gas reserves from the Woodford-Stack Shale Play (Mississippian/Devonian) in the Arkoma Basin of Oklahoma, with the Devonian aged Woodford Shale as the primary source of production. This is a proven play with various companies actively drilling and completing horizontal Woodford/Mayes/Caney Shale wells in the Arkoma Basin, at attractive economics, throughout the prospective trend of the play. In comparison to the Delaware and Midland basin play in West Texas and the Woodford SCOOP/STACK play in western Oklahoma,  we enjoy as good, if not better, economics as a result of substantially lower leasehold costs ($500/Acre vs. $7,500 to $20,000/Acre) and lower well costs ($5.5MM vs. $8-$10MM) as a result of more shallow drilling depths for our wells, of which the more recent 2-mile lateral completions have 30-day IP’s of 10 – 15MMCFGPD with realistic EUR’s of 10-12BCFG. Once we complete our leasing in a prospect, we seek joint venture partners to participate with us in the drilling and develop of the prospect, and/or we have sold the entire leasehold position in one of our prospects to a company that did not wish to be involved in a joint venture.

 

The current prospect we are preparing to drill in this play, our Rock Creek Prospect, covers ten 640 acre sections, making up 6,400 contiguous acres in the prospective trend of the play, over which we have leased the majority of the acreage. The prospect sits in the sweet spot of the play and is surrounded by strong Woodford completions recently drilled. The prospect is sitting on 200+BCF of productive gas reserves and we have good pipeline infrastructure already in place, with both interstate and intrastate pipelines, providing ready access to market our gas. This is a “drill-ready” prospect, and we have initiated unitization/pooling proceedings on the initial 1280 acre unit in the prospect that we propose to be drilled.

 

WhitMar is seeking a joint venture partner or partners to participate with us in the drilling and development of this prospect. A 50% Partner’s initial commitment would be approximately $4.7Million for the leasehold/seismic and an initial horizontal Woodford Shale well, after which Partner has option to continue on with the drilling of 3 more wells to bring the prospect to Proven Developed status, at which time, the 50% partner will have spent a total estimated cost of approximately $14MM and  we have the option to sell the prospect at a PUD value of $58MM, for a 400%+ return in less than  3 years.

 

The prospect also creates a mid-stream opportunity, that may be developed by the partner(s) together with or separately from the upstream asset. If the partner(s) elect to sell the Prospect at PUD value after drilling the first 4 wells, they will have the option to retain control of the gathering pipeline system (the “toll road”) for transporting the gas production after the sale of the producing wells, which will be a significant cash flow generator over the life of the productive wells.

 

If you have an interest in seeing more information on this prospect, please contact us and we will send you an Executive Summary, a Power Point Nutshell Technical Review  and a Pro‐Forma for the prospect, and/or we can set up a complete prospect presentation (with more technical data than the nutshell review) for you and your associates.

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